It has crept up on us slowly, but it is true now of more than half the households in the country.
The largest tax they pay is no longer the federal income tax, but the Social Security tax.
Last year, a one-breadwinner family of four with a wage income of $10,000 a year paid $446 in federal income taxes. But it paid $585 in Social Security taxes. Next year, if President Carter's proposed income tax cuts are enacted, the gap will be greater. This $10,000-a-year family's income taxes will drop to $134, while, under legislation Congress passed last month, its Social Sercurity taxes will be nearly five times as much - $613.
Only after a one-earner family makes about $14,000 will its income tax start to exceed its Social Security taxes.
The transformation of the Social Security tax into the dominant tax for American families has come about gradually, over the past 15 or 20 year. Hardly anyone really stopped to take stock of the shift until recently.
But the shift has important implications for general social equity and for the distribution of wealth in this country.
What it means is that the nation increasingly is collecting the bulk of its taxes with a "regressive" tax rather than a a "progressive" tax. A regressive tax hits lower-income taxpayers proportnally harder than those at the upper end of the scale.
Joseph A. Pechman, the Brookings Institution tax experts, says, "The result of all this is that we now have placed the burden of the tax system on low- and middle-income wage-earners. And it's going to creep further into the middle-income brackets as the years go on."
The shift in the nation's tax burden stems from two disparate, but related factors:
Demands for higher Social Security benefits have sent the cost of the old-age and disability program soaring - and Congress has stubbornly raised payroll taxes to finance them rather than turning to income taxes.
The income-tax base has been steadily eroded by tax preferences and tax subsidies for various special-interests - including corporations and individuals. These breaks now cost the Treasury $112.7 billion a year.
The shift has been dramatic: in 1950, the dividual income tax accounted for 79.7 percent of the revenues the government gets by from income and social insurance taxes, while Security tax made up only 20.3 per cent.
Today, the income tax accounts for 59.3 per cent and the payroll tax for 40.7 per cent - a substantial turnabout by any measure.
The only way policymakers have been to offset the higher Social Security taxes in recent years has been to lower the income tax - a move that only heightens the shift each time.
A case in point is the tax shift the Carter administration is proposing this week - a $24.5 billion cut in individual and business income taxes proposed in part to help offset the hefty Social Security tax rise that went into effect Jan. 1.
If the President's program is adopted, the same $10,000-a-year one-earner family would pay only $134 in income taxes - meaning it then would be paying 5 times as much in payroll taxes, instead of 1 1/4 times, as it does now.
Moreover, unless Congress moves to reverse it, the shift is bound to speed up in coming years. The Social Security bill the lawmakers passed in December already has scheduled sharp payroll tax hikes between now and 1986, and President Carter has promised periodic income-tax cuts to offset them.
In effect, the die is cast.
The second factor in the shift - the erosion of the income-tax base by tax breaks for specific groups of individuals and corporations - also shows no signs of abatement.
The President's new tax package proposes ending a few of these breaks, but it's not likely to be passed intact. Carter even scrapped a more comprehensive proposal for "tax reform" - in part because of widespread political opposition.
Without these "tax expenditures," as they're called the income tax would be producing an additional $112.7 billion a year - enough to finance the whole Social Security system and then some. And taxes again would be levied according to the tax-payer's ability to pay.
One of the biggest of these "tax expenditures" is a tax break that is virtually unknown to many Americans - the 10 per cent investment tax credit now allowed businesses that spend money buying new equipment.
For every $100 these firms spend on new facilities, they get to reduce their taxes by $10. But the tax break drains away $9.67 billion in potential revenues that otherwise would go to the Treasury.
Another is the break allowing homeowners to deduct the mortgage interest and property taxes they taxes they pay on their homes. The two together sap income-tax revenues by another $11 billion.
Others for business include the small-business surtax exemption, $4.2 billion, the tax subsidy for exporters, $1.2 billion, and a writeoff for cost depletion, $1 billion.
For individuals, some of the big items include deductions for state and local taxes $8.9 billion; special tax treatment of long term capital gains (profits from the sale of stocks or other property held a certain length of time), $7.36 billion; and deductions for charitable contributions, $5.5 billion.
How can policymakers reverse the current trend and make the tax system more progressive again?
The most obivious answer would be to turn entirely to the income tax to finance all government programs, including Social Security. Tax experts generally favor this as the fairest solution for all taxpayers, but Congress still is skittish about it.
The difficulty is that lawmakers fear that financing Social Security with the income tax would leave them open to the charge that they are "destroying the sanctity" of the Social Security "trust fund," which is set apart from programs now financed by income taxes.
Actually, however, the trust fund argument is largely a myth. In truth, there is no direct relationship between the taxes a worker pays into the Social Security fund and the benefits he or she receives upon retirement. The benefits all are financed from the current year's payroll taxes - the same as programs paid for from income-tax monies.
Rep. Al Ullman (D-Ore), chairman of the House Ways and Means Committee, has proposed a "safer" version of this same plan - to replace the payroll tax gradually with a new form of tax, possibly a nationwide sales tax. Tax experts say this would be better than a payroll tax, if it's structured correctly, but not as "progressive" as the income tax.
There also is the prospect of broadening the income tax base by eliminating more special tax breaks. But judging by Carter's retreat in the face of political opposition to tax-revision, it isn't likely to come very soon.
Meanwhile, the great tax shift is continuing.